Continued work requires County to step in with repayment plan for $3.6 million in additional Kitsap Consolidated Housing Authority help

(Port Orchard, WA) – In a continuing effort to stabilize the Kitsap County Consolidated Housing Authority’s financial condition, Kitsap County has been asked to honor a prior commitment to back the Authority’s debt.  Accordingly, the County will assume direct responsibility for $3.6 million of Housing Authority debt under a plan that will be up for approval before the Board of County Commissioners at the Board’s next regular meeting scheduled for October 12, 2009.  The Authority’s Board  approved the financing plan on Tuesday, October 6, 2009. 

Key terms, similar to a separate plan approved by the County in May 2009, include securing deeds of trust for housing authority properties and ensuring County control over sales of the properties. 

Kitsap County entered into a contingent loan agreement in 2006 to loan the Consolidated Housing Authority up to $3 million in the event the Authority could not pay a $5.244 million loan earmarked for low and affordable housing projects.  Since the Housing Authority is unable to repay or restructure its debts due this year, the County has been asked to perform on its legal obligation to loan the Authority $3 million of this debt.  An additional $622,975 will enable the Authority to pay off the loan securing its Silverdale Office Building, located on Bayshore Drive.  That property, and four other properties, is pledged to Kitsap County under this plan, with proceeds from the sale of the properties used to repay the County. 

A similar arrangement approved in May 2009 has already generated over $10 million in projected net proceeds from sales of assets scheduled to close by October 10, 2009.

This arrangement gives Kitsap County direct control over several key assets and will allow the County at least four years to sell the assets, with proceeds dedicated to repay the County’s loan.  During that time the County will be required to make interest-only payments on the loan.

Conditions of the financing arrangement in which the County will assume $3,622,975 of debt include:

·  The County will assume $3 million of the debt incurred by the Authority to fund low and affordable housing projects within the County.  This $3 million of the total obligation represents the amount obligated for this purpose in 2006; the balance of the obligation remains with the Authority.

·  The Authority incurred the additional $622,975 loan in its acquisition of its Office Building located at 9307 Bayshore Drive NW in Silverdale.  This property is now being actively marketed, and proceeds will be paid to the County to cover a significant portion of the total obligation under this repayment plan.

·  The County will have the right to direct and manage the sale of specific properties pledged as security from the Authority to the County. 

This repayment plan is the last major piece of Housing Authority debt guaranteed by the County outside of the Norm Dicks Government Center located in downtown Bremerton. The Norm Dicks Government Center bonds are secured by rents from the County, the City of Bremerton, Bremerton Housing Authority, and the Kitsap County Consolidated Housing Authority.  Payments on the bonds are current and the County has not been alerted to  financial difficulties with that project.

Related Links:

Major terms of the repayment plan

To contact the Public Communications Manager, 
call Doug Bear at 360-337-4598 or email: dbear@co.kitsap.wa.us